Dan Steinbock

Dan Steinbock

About the author:

Dr Steinbock is an internationally recognized expert of the multipolar world. He focuses on international business, international relations, investment and risk among all major advanced economies and large emerging economies. In addition to advisory activities (www.differencegroup.net), he is affiliated with India China and America Institute (USA), Shanghai Institutes for International Studies (China) and EU Center (Singapore). For more, please see http://www.differencegroup.net/. Research Director of International Business at India China and America Institute (USA) and Visiting Fellow at Shanghai Institutes for International Studies (China) and the EU Center (Singapore).

The second World Internet Conference (WIC), also known as the Wuzhen Summit, will take place Dec 16 -18, in Wuzhen, Zhejiang. Chinese President Xi Jinping will attend the conference and address the opening ceremony. It takes place amid dramatic expansion of Chinese e-commerce, thanks to great market potential and government's supportive policies.

While the brutal expansion of the Islamic State of Levant (ISIL) has triggered great fears in popular imagination, Dr. Steinbock says that the ISIL’s — and its potential successors’ — claim to a territorial caliphate is likely to pose enduring economic, political and strategic challenges to the international community.

As the recent summit of the Organization of the Petroleum Exporting Countries (OPEC) suggests, they will not lower the oil production ceiling, despite great overcapacity. What we are witnessing is not just a cyclical shift, but a new secular tend that heralds the demise of the petrodollar era in the Middle East.

Recently, the International Monetary Fund's staff and its chief Christine Lagarde suggested that the yuan should join the basket of international reserve currencies (the Special Drawing Rights, or SDR). The inclusion is expected to be approved at the IMF board meeting on Nov 30.

In Washington’s view, President Obama’s presence in the Asia Pacific Cooperation (APEC) Summit was vital to underscore America’s sustained commitment to the region. With its recovery, the U.S. has some wind in its sails. It also enjoys the success of the Trans-Pacific Partnership (TPP) agreement, although the devil is in the details.

In August, the Financial Times reported that 11 Chinese shadow banks had written an open letter to the top party official in Hebei (河北) province asking for a bailout. Soon afterwards, Foreign Policy magazine ran a story headlined, “Shadow banking is killing China’s stock markets.”

After half a decade of low growth, global organizations continue to represent the victors of World War II, not the economic powerhouses of the 21st century. However, change is in the air. Following a series of coordinated terror attacks in Paris, the Islamic State of Levant left the "city of light" in dark. Only hours later, world leaders began the G20 Summit in Antalya, Turkey.

After 271,000 were jobs added in October, US unemployment rate fell to 5.0 percent. Meanwhile, average annual hourly earnings climbed by the most since 2009. As a result, the dollar strengthened and treasuries plunged. The report was a green light for the Fed’s chief Janet Yellen and her deputy Stanley Fisher, who recently held out the possibility of a December rate increase.

Syria’s nightmare is a regional conflict with global stakes. It exemplifies the eclipse of US efforts at regime changes, whereas Chinese policy holds the promise of economic development. However, time is running out.

The long-anticipated abolition of China's one-child policy is a first step in the right direction. However, they can do much more. In the West, the criticism of the one-child policy is that it is a "cruel Communist strategy." In reality, most opponents of that policy were Marxists and the idea itself came from the West.

China’s new development blueprint seeks to realize a moderately prosperous society by 2020. At the recently concluded Fifth Plenum of the 18th Communist Party of China Central Committee, the “Four Comprehensives” became the grand blueprint for the 13th Five-Year Plan (2016-20). Each of the four tasks requires broad measures and pragmatic actions.

While the U.S.-led Trans-Pacific Partnership has potential to split Asia Pacific, it could be a foundation for truly free trade, along with other free trade plans in the region. Recently, the U.S. foreign policy elite and mainstream media greeted the U.S.-led Trans-Pacific Partnership (TPP) agreement with great fanfare. In typical fashion, the Washington Post has argued, “by knitting the U.S. and Japanese economies together in their first free-trade deal – and binding both of them closer to rising Asian nations – the TPP would create a counterweight to China in East Asia.”

As China’s growth is decelerating, Chinese purchasing power is accelerating. The next five-year plan will boost the change. Only a few years ago, China still enjoyed double-digit growth. According to third-quarter data, the Chinese economy grew 6.9 percent year-on-year. As a result, some observers have concluded that the Chinese economy is in trouble, Chinese consumers are hunkering down and the next five-year plan must be dead on arrival.

In the past, so the legend goes, Hong Kong feared nothing. Today, the city seems frozen by its obstacles. Can it change, once more? In a recent commentary, I argued that, in the absence of a radical new growth strategy, Hong Kong is facing an eclipse. In a response, “Hong Kong’s strength lies in China’s weakness,” Jake Van Der Kamp argues that Hong Kong’s ageing population is not a major challenge; that the industrial base of the Chinese province of Guangdong is relatively low-tech; and as a result, further integration with it would not enhance Hong Kong’s growth prospects.

Hong Kong’s growth has eclipsed, says Dan Steinbock. Without an aggressive growth strategy and China’s innovation, the city’s living standards will deflate. “We are looking at a new normal, at the current level, at about 2-4 percent,” Financial Secretary John Tsang said recently. That may prove to be an understatement.

Of the world’s two largest international financial centers, London is warming up to the renminbi, but Wall Street is running behind. Recently, the former mayor of New York City Mike Bloomberg congratulated President Barack Obama and President Xi Jinping for a number of economic steps, but in particular “advancing a mechanism to trade the Chinese currency in the United States.”

The recent Trans-Pacific Partnership agreement presents Asia with good, bad and ugly scenarios. Had the TPP failed, that would have been a severe blow to the credibility of the United States in Asia. Yet, it excludes Asia’s largest economies – China, Indonesia and India.

Since lower oil prices typically result in depreciation of the oil exporters’ currencies, the dramatic plunge of oil prices has severe implications for sub-Saharan Africa. After the global financial crisis, many emerging economies have coped with diminished global growth prospects by deploying direct government intervention and capital controls for competitive devaluation. In turn, advanced economies have achieved the same indirectly through low policy rates and quantitative easing (QE).